During the third quarter of 2025, there were multiple regulatory developments involving federal and California agencies. These updates are summarized in the following sections.

FEDERAL REGULATORY UPDATES

Bureau of Land Management

On September 11, 2025, the United States (U.S.) Department of the Interior (DOI) published in the Federal Register a proposal to rescind the Bureau of Land Management’s (BLM’s) Public Lands Rule, officially known as the Conservation and Landscape Health Rule. The rule classifies conservation, including environmental mitigation and restoration leases, on equal footing as other uses (e.g., energy development, timber production, grading, and recreation) on BLM-managed public lands. Finalized in 2024, the rule formally recognized conservation as an authorized and essential use of public lands under the Federal Land Policy and Management Act. The DOI has proposed to rescind the rule as a way to reduce perceived barriers to energy development. The 60-day public comment period ends on November 10, 2025.

United States Fish and Wildlife Service

During the third quarter of 2025, the U.S. Fish and Wildlife Service approved a final recovery plan for the federally listed Arizona eryngo (Eryngium sparganophyllum), as well as draft recovery plans for the Fickeisen Plains cactus (Pediocactus peeblesianus var. fickeiseniae), Peebles Navajo cactus (Pediocactus peeblesianus var. peeblesianus), Sonoyta mud turtle (Kinosternon sonoriense longifemorale), Sacramento Mountains checkerspot butterfly (Euphydryas anicia cloudcrofti), peppered chub (Macrhybopsis tetranema), and Eastern black rail (Laterallus jamaicensis jamaicensis). Draft recovery plans were also published for three Guadalupe River Basin mussel species—the false spike (Quincuncina mitchelli), Guadalupe fatmucket (Lampsilis bergmanni), and Guadalupe orb (Cyclonaias necki).

Executive Office

The One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, modifies clean energy tax credits previously approved under the Inflation Reduction Act of 2022. Clean energy incentives for OBBBA accelerate the phase-out of tax credits for solar projects, wind projects, electric vehicles (EVs), and EV charging projects, requiring projects starting construction after July 5, 2026, to be in service by the end of 2027. All projects must comply with a 4-year safe harbor, meaning they are in service within 4 calendar years of the construction start date. Tax credits for other clean energy technologies (e.g., energy storage, geothermal power, hydropower, renewable energy, and natural gas) remain available for projects until 2033.

National Environmental Policy Act

On September 29, 2025, the Council on Environmental Quality (CEQ) issued an updated memorandum reflecting the most recent statutory and judicial changes to the National Environmental Policy Act (NEPA), including Section 112 of NEPA enacted under the OBBBA and the Supreme Court’s Decision in Seven County Infrastructure Coalition v. Eagle County, Colorado. As previously reported in Insignia’s Q1 2025 update and Q2 2025 update, the CEQ issued a memorandum in February 2025 outlining the implementation of Executive Order 14154 Unleashing American Energy. This NEPA guidance outlines new procedures for federal agencies to revise their NEPA implementing practices in alignment with current congressional mandates, presidential direction, and Supreme Court clarification.

Key changes and updates include the following:

• Project Sponsor Opt-in Fees: Section 112 of NEPA now allows project sponsors to pay fees to accelerate NEPA review deadlines. The CEQ must notify project sponsors of the fee amount within 15 days of receiving required project information. Consequently, federal agencies must address this provision in their NEPA implementing procedures.

• Supreme Court “Course Correction:” The recent Supreme Court emphasized that NEPA is a purely procedural statute and has directed lower courts to give substantial deference to federal agency decisions on the scope and level of analysis in NEPA reviews. Federal agencies are not required to analyze environmental effects from unrelated projects or actions outside of their statutory authority.

• Indirect Effects and Scope Limitations: Federal agencies have discretion to determine how far to trace indirect effects of proposed actions, with lower courts expected to defer to reasonable federal agency judgments.

• Deadlines and Page Limits: The 2023 amendments to NEPA, reinforced by the Supreme Court, established strict deadlines and page limits, as opposed to previous goals, for Environmental Assessments and Environmental Impact Statements to prevent protracted reviews.

• CEQ Consultation Requirements: Federal agencies must consult with the CEQ when revising or establishing NEPA implementing procedures, submitting documentation for initial review, and incorporating interagency and public feedback in response to updated NEPA guidance, as needed.

• Flexibility in Procedure Implementation: Federal agencies may issue implementing procedures as guidance or handbooks rather than previously requiring codified regulations, allowing for faster updates in response to experience and legal developments.

These key changes are expected to facilitate faster project approvals under NEPA.

CALIFORNIA REGULATORY UPDATES

Senate Bill 254

Approved on September 19, 2025, Senate Bill (SB) 254 updates wildfire management and energy infrastructure programs in response to the California wildfires that occurred in January 2025. SB 254 expands the California Wildfire Fund by establishing an $18 billion Continuation Account funded by three sources (i.e., contributions from large electric corporations, revenue generated from the ratepayers of those corporations through a non-bypassable charge, and proceeds from bonds issued pursuant to Section 80540 of the Water Code).

SB 254 also introduces a right-of-first-refusal mechanism for insurance subrogation claims and creates the Transmission Infrastructure Accelerator to facilitate public financing and reduce the costs of developing high-voltage electric transmission lines. The accelerator will coordinate statewide transmission planning and development, ensure accelerator projects meet internal criteria, and evaluate the California Independent System Operator’s transmission planning process to select accelerator projects for public financing. The program provides public funding and resources to support financing and development strategies for eligible projects.

Office of Planning and Research

The California Environmental Quality Act (CEQA), originally adopted in 1970, requires state and local agencies to conduct environmental analyses and disclose potential impacts of projects. On June 30, 2025, Assembly Bill (AB) 130 and SB 131 were signed into law, introducing significant CEQA reforms primarily focused on housing projects.

AB 130 creates a statutory CEQA exemption for housing projects on urban or previously developed sites of up to 20 acres. These housing projects include residential and mixed-use projects, provided the projects comply with applicable local zoning, planning, and coastal (i.e., California Coastal Commission) standards. AB 130 also allows developers to mitigate significant transportation impacts by contributing to the Transit-Oriented Development Implementation Fund to support affordable housing and related infrastructure.

SB 131 expands CEQA exemptions for specific project types, including agricultural employee housing, wildfire-risk-reduction activities, disadvantaged community water systems, certain public parks and trails, climate-adaptation planning updates, daycare centers, food banks, advanced manufacturing facilities, rural health clinics, and high-speed rail facilities. SB 131 also introduces a “near-miss” rule, where projects that fail one exemption criterion only require limited CEQA review on that specific issue. SB 131 also shortens litigation timelines and clarifies that CEQA may only be used for environmental purposes.

California Department of Fish and Wildlife

The California Endangered Species Act (CESA), enacted in 1970 and amended in 1984 to include plants and invertebrate species, continued to expand its protections in 2025. On July 15, the Mojave desert tortoise (Gopherus agassizii) was listed as endangered under CESA.

California Public Utilities Commission

On July 24, 2025, the California Public Utilities Commission (CPUC) approved an interim decision to streamline and expedite transmission-level electric grid connections for high-energy users, including artificial intelligence data centers and EV charging infrastructure within Pacific Gas and Electric Company’s (PG&E’s) service territory, which includes portions of Northern California and Central California. Previously, PG&E approved large transmission-level customer requests on a case-by-case basis and proposed PG&E’s Electric Rule 30, which allows applicants who pay for necessary infrastructure work upfront to obtain accelerated transmission service, thereby supporting the more rapid development of energy infrastructure to meet growing high-demand load requirements and to improve efficiency. The CPUC partially approved PG&E’s proposal for the interim implementation of Electric Rule 30. The CPUC will determine the terms and cost allocation for any potential refunds in a future decision. Under the interim rule, eligible applicants benefit from an accelerated pathway to transmission-level service.